Following a March 30 field hearing, the House Agriculture Committee left northeast Arkansas with a better understanding of the unique intricacies of Southern agriculture.
The lawmakers, who have been deep in debate on the next farm bill, will carry a long list concerns back to Capitol Hill including: a Southern view of farm and conservation programs, pushback on proposals for a “one-size-fits-all” federal safety net, the hurdles faced by cotton and rice, worries of cow/calf operations, regulatory overkill of aquaculture, and continuing irritation with proposed Department of Labor rules regarding child labor on the farm.
Hosted by Arkansas State University in Jonesboro – a city in committee member Rep. Rick Crawford’s district – the lawmakers heard the testimony of 10 farmers and ranchers.
For more on the hearing, including prepared testimony, see here.
Crawford asked Randy Veach, row-crop farmer and President of the Arkansas Farm Bureau, for details on the National Cotton Council’s “STAX (Stacked Income Protection Plan)” – a revenue-based crop insurance product proposed to replace direct and counter-cyclical payments for cotton-- and how it would work for state cotton producers.
Veach advocated for “two or three” options for farmers to choose from. However, “the STAX program would work very well. I think with the amount of irrigation we have – mitigating risk through irrigation – we need a little more protection in price.
“One of the best ways of doing that is to have options (for a safety net). … They could decide if that program is the one that works best for them or if there is more of a price-based type program (would be preferable).
“The options have to be very viable. … If we have options for a safety net then we’ll have the opportunity to see which one works best for a particular commodity on a particular farm’s ground.”
Crawford delved into the future role of conservation programs, particularly the Conservation Reserve Program (CRP). Several witnesses said they had not signed up for CRP.
However, Bowen Flowers, a row-crop producer from Clarksdale, Miss., found the programs praiseworthy. “CRP has been a good product in the Mississippi Delta. A lot of land has gone into CRP and WRP (Wetlands Reserve Program). Like everyone else, we’re 80 percent irrigated and a lot of the land that isn’t irrigated has been put into CRP for wildlife.
“We’re starting to have some water issues and want to conserve it for future generations. One thing I’d like to see is, maybe, the development of a CRP program where we could impound water and use that for irrigation.
“EQIP (Environmental Quality Incentives Program) has been very important to our area, also.”
Finance, cattle feed and means testing
Indiana Rep. Marlin Stutzman, a fourth-generation farmer, shifted the focus to finance. “I remember going into the bank with my father. I always hated sitting on the farmer’s side of desk. I always wanted to be on the banker’s side. Well today, I’d rather be on the farmer’s side – the bankers have kind of taken it on the chin, lately.
“Has credit availability changed for you? Your experiences with access to credit? What do you see with your neighbors in your communities?”
Tim Burch, cotton and peanut producer from Newton, Georgia, said financial backing is increasingly difficult to secure. “In my area, much like I’m sure it is around the United States, people who don’t need to borrow have ready access to money. The people that need it have trouble getting it. It just depends on your collateral situation. It’s very tight for people with marginal operations.”
Flowers, a board member at a bank, agreed. “We’d like to see some kind of crop insurance farmers in our area can afford and take advantage of. The banks want to make sure they have pretty good collateral.
“Our problem is we don’t have the deep losses. But the losses between ‘the deep’ and what it actually costs to produce is where we have our problems.”
Oklahoma Rep. Frank Lucas, committee chairman, asked Flowers about reports that banks are requiring farmers have much more documentation “to prove you’re covering all your bases. Is that your observation?”
Flowers: “That is a definite. We’re going through more and more rigorous examinations at the bank.
“The first thing we look at is what the direct payments are, what crops have already been sold, and what kind of insurance you have.”
Lucas: “It doesn’t necessarily matter how great your record is and how much confidence your banker has in you?”
Flowers: “That’s correct. The days of just knowing who you’re dealing with are over. You’ve (now) got to have everything documented, every ‘i’ dotted and ‘t’ crossed.”
Crop insurance was at the center of Lucas’ questions to John Owen, a row-crop farmer from Rayville, Louisiana.
“The main problem with using crop insurance as the sole basis for risk management is that it can’t protect you against a multi-year low price scenario such as we experienced in the late 1990s,” said Owens.
“The indemnities for crop insurance, or the triggers, are set in the winter and are generally based off the Chicago Board of Trade futures. When those prices are low, you have a product that provides no protection from the beginning.
“So, without an underlying reference price – either counter-cyclical or through a revenue-assurance policy through the government that is economically viable – crop insurance isn’t a long-term safety net for agriculture in the Mid-South; or, as far as I can see, anywhere in the country.”
In his testimony, Dan Stewart, a cow/calf producer from Mountain View, Ark., linked high feed prices to biofuels – something the renewable energy industry refutes. During the question-and-answer portion of the hearing, he said such industry claims “are hard to believe. … At first, they were talking about distillers grain (for feed). We haven’t been able to utilize that as a feed source like we were once led to believe.”
Texas Rep. Randy Neugebauer pointed out that David Hundley, a rice, corn and soybean farmer from Jonesboro, had spoken out against means testing for farm program eligibility. “A lot of folks are opposed to large farming operations receiving farm payments. I think in your testimony you said it would be ‘detrimental to family farms in Arkansas.’
Means testing “in itself,” said Hundley “is almost a failed attempt to regulate a failed policy. The safety net we need (should) be available to every farm and every acre regardless of the size of” the operation.
Lawmakers, said Neugebauer, are faced with prioritizing, with “making choices … dealing with a smaller amount of funds to put together a good, comprehensive farm policy.” He asked Owen “the most important farm program that exists today? (The one) we should work really hard to preserve?”
“By far” the counter-cyclical program is “the most important and most dependable” replied Owen. “Having a meaningful reference price we can take to a bank for finance, having a loan program we can use to aid our marketing is the most important.
“We need price protection and we need yield protection. The price protection has to come from a counter-cyclical-type program. Yield protection could come from insurance.”
Stewart, asked about the biggest challenges for cow/calf producers, said “regardless of whether you attribute it to global warming, weather cycles, or whatever, our weather seems to be in a system of extremes. In our area, we can have massive floods all spring. Then, summer gets here and we don’t get another drop (of rain) until the next winter. That’s one of the biggest challenges as far as forage production.
“Like most farmers and ranchers, we like to look ahead and plan, sometimes, for the worse. There are environmental issues that possibly be out there – like the (EPA regulating) dust. They say that is just a myth but it concerns a lot of farmers. I’d like to see some assurances that it will not affect us.”
Owen also expressed displeasure with the EPA and advocated it being “reined in. We’re excellent stewards of the land and I’d put our record up against any country as far as the way we take care of our land, the way our pesticides are regulated, the way we use our pesticides. We have a fabulous track record and don’t need further regulation.”
Labor, aquaculture and rice
Crawford said “a number of folks” had brought to his attention recent, controversial Department of Labor child labor laws that might impact family farms. “What would be the impact if they were … not to allow your children” to work on the farm?
Stewart: “Personally, I think it would be devastating to the family farm. My thought is that at an early age you need to instill a love for farming. In our area, particularly, farming is more than just an economic thing. It’s a way of life and something you really want to do because, at times, it’s tough. If you don’t love what you do, you’re not going to stay in it. If you instill that in your children and grandchildren at an early age, you can continue to have the family farm.”
Mike Freeze, aquaculture producer from Keo, Ark., was queried on the factors contributing to the decline of aquaculture. “There are rising input costs – increasing feed and energy costs – that affect the aquaculture industry just as they do other farmers,” said Freeze.
“But there is an unlevel playing field with the seafood inspections is one of the big issues. I think this committee tried to correct that in the 2008 farm bill. It’s been almost four years and, still, the inspection of catfish coming into the United States hasn’t been transferred from FDA to FSIS (the USDA’s Food Service and Inspection Service). … We’re wondering how much longer this is going to take.”
Freeze also pointed to “regulatory issues. All farmers feel as if they’re overregulated. But I think if you add it up for fish farmers, we’re regulated by something like 30 to 40 different state and federal agencies. That’s a real problem.”
The unique set of factors that rice brings to the farm policy debate was also covered. Stutzman, a corn and soybean farmer, admitted that “rice is a new crop to me. I don’t understand the complexities you all face.”
Stutzman cited Owen’s testimony that “what rice farmers need from federal crop insurance is a product that would help protect against increased production and input costs – particularly for energy and energy-related inputs. For example, fuel, fertilizer and other energy-related inputs represent about 70 percent of total variable costs.”
“We’re seeing a lot of volatility in the corn and soybean markets. What are you seeing on the rice side? What’s different about rice?”
Owen said that for the last four years, “rice has worked with the RMA (USDA’s Risk Management Agency) to develop a policy that would provide us with rising input protections in fuel and fertilizer, primarily.
“The main thing that’s different about rice is the cost of running irrigation pumps. When we have a drought scenario -- and you have a 100-horse power motor, on average, in the Mid-South – (the pump can run) 24 hours a day trying to keep water on 100 acres of rice. Well, most rice farmers are farming 750 to 1,500 acres of rice in their rotational mix. That’s a significant consumption of diesel.
“Also, when we have fertilizer price spikes such as in 2008, it runs production costs through the roof.”
Later in the hearing, Owen highlighted another difference with rice. “The United States only grows about 3 percent of the world’s rice crop. However, we’re the third or fourth largest exporter of rice. Ninety-five percent of the rice grown in the world is consumed where it’s grown. So, the five percent left for export can be extremely volatile in price.
“Currently, we’re dealing with countries that are subsidizing their exports: India, Thailand and Brazil. That changes the dynamic a bit.
“Rice is an expensive crop to grow. Hopefully we’ll get things ironed out and we’ll (soon have) the ability to hedge rice – like using futures for corn, soybeans, wheat and cotton. But we’re not there yet.”